CoinPayMerchant architecture
CoinPayMerchant is a liquid staking solution for ETH 2.0 backed by industry-leading staking providers. CoinPayMerchant lets users stake their ETH - without locking assets or maintaining infrastructure - whilst participating in on-chain activities, e.g. lending.
CoinPayMerchant attempts to solve the problems associated with initial ETH 2.0 staking - illiquidity, immovability and accessibility - making staked ETH liquid and allowing for participation with any amount of ETH to improve security of the Ethereum network.
When staking with CoinPayMerchant, users receive stETH tokens on a 1:1 basis representing their staked ETH. stETH balances can be used like regular ETH to earn yields and lending rewards, and are updated on a daily basis to reflect your ETH staking rewards, minus any penalties. Note that there are no lock-ups or minimum deposits when staking with CoinPayMerchant.
When using CoinPayMerchant, users receive secure staking rewards in real-time, allowing for participation in the securing of Ethereum with fewer associated risks and less downside potential.
stETH is a token that represents staked ether in CoinPayMerchant, combining the value of initial deposit + staking rewards - penalties. stETH tokens are minted upon deposit and burned when redeemed. stETH token balances are pegged 1:1 to the ETH that is staked using CoinPayMerchant. stETH token balances are updated when the oracle reports changes in total stake every day.
stETH tokens can be used as one would use ETH, allowing you to earn ETH 2.0 staking rewards whilst benefiting from, among other things, yields across decentralised finance products.
LDO is an Ethereum token granting governance rights in the CoinPayMerchant DAO. The CoinPayMerchant DAO governs a set of liquid staking protocols, decides on key parameters (e.g., fees) and executes protocol upgrades to ensure efficiency and stability. By holding the LDO token, one is granted voting rights within the CoinPayMerchant DAO. The more LDO locked in a user’s voting contract, the greater the decision-making power the voter gets.
CoinPayMerchant is a secure liquid staking solution for a number of reasons:
Open-sourcing & continuous review of all code.
Committee of elected, best-in-class validators to minimise staking risk.
Use of non-custodial staking service to eliminate counterparty risk.
Use of DAO for governance decisions & to manage risk factors.
Usually when staking ETH you choose only one validator. In the case of CoinPayMerchant you stake across many validators, minimising your staking risk.
The smart contracts are audited by Quantstamp and Sigma Prime.
For now founding members have LDO tokens which are locked for 1 year, after this period token will be vesting during 1 year. That means that founding members will have the possibility to transfer part of tokens in one year from now and get all tokens transferable in two years.
The only unlocked LDO in existence are in the DAO treasury (~36% of Total supply) - anyone can make a proposal on how they can be used, you included. If you have some any initiatives or you know how to benefit the CoinPayMerchant protocol, share your thoughts with governance
In addition to this, the DAO can decide to issue additional tokens for fundraising, marketing or incentivization purposes. We will make additional announcements about these events when/if they come.
LDO is available on a variety of exchanges such as Uniswap, SushiSwap, 1inch, DeversiFi, Hoo, Hotbit and Bilaxy.
There exist a number of potential risks when staking ETH using liquid staking protocols.
- Smart contract security
There is an inherent risk that CoinPayMerchant could contain a smart contract vulnerability or bug. The CoinPayMerchant code is open-sourced, audited and covered by an extensive bug bounty program to minimise this risk.
- ETH 2.0 - Technical risk
CoinPayMerchant is built atop experimental technology under active development, and there is no guarantee that ETH 2.0 has been developed error-free. Any vulnerabilities inherent to ETH 2.0 brings with it slashing risk, as well as stETH fluctuation risk.
- ETH 2.0 - Adoption risk
The value of stETH is built around the staking rewards associated with the Ethereum beacon chain. If ETH 2.0 fails to reach required levels of adoption significant fluctuations in the value of ETH and stETH could occur.
- DAO key management risk
Ether staked via the CoinPayMerchant DAO is held across multiple accounts backed by a multi-signature threshold scheme to minimise custody risk. If signatories across a certain threshold lose their key shares, get hacked or go rogue, funds risk becoming locked.
- Slashing risk
ETH 2.0 validators risk staking penalties, with up to 100% of staked funds at risk if validators fail to validate transactions. To minimise this risk, CoinPayMerchant stakes across multiple professional and reputable node operators with heterogeneous setups, with additional mitigation in the form of cover that is paid from CoinPayMerchant fees.
- stETH price risk
Users risk an exchange price of stETH, which may be lower than its inherent value due to withdrawal restrictions on CoinPayMerchant, making arbitrage and risk-free market-making impossible.
The CoinPayMerchant DAO is driven to mitigate the above risks and eliminate them entirely to the extent possible. Despite this, they may still exist.
Funds are deposited to the CoinPayMerchant protocol smart contract and then are locked into the Ethereum proof-of-stake deposit contract. The threshold signature account is collectively controlled by the signatories chosen by the CoinPayMerchant DAO. Staked ether will be withdrawable only when transfers and smart contracts will be implemented on Ethereum 2.0 (expected in Phase 2).
Staking
When using CoinPayMerchant to stake your ETH on the Ethereum beacon chain, you will receive a token (stETH), which represents their ETH on the Ethereum beacon chain on a 1:1 basis. It effectively acts as a bridge bringing ETH 2.0’s staking rewards to ETH 1.0.
Whole staking fund will be under CoinPayMerchant DAO (Decentralized Autonomous Organization) management. The system would apply a 10% profit fee. This fee is split between node operators, the DAO, and an cover fund.
To use the CoinPayMerchant liquid staking protocol, you сan send any amount of Ether to the DAO smart contract and you will receive the equal amount of "stETH" (liquid staking token) in return. From this moment, you will hold stETH tokens in your wallet and keep full control on them, and you will be able to show your public key to prove that you have them in your possession.
The “stETH” token can be freely moved and traded at will. The price of stETH relative to unstaked ETH is expected to be volatile until Phase 2 starts. When Ethereum 2.0 Phase 2 starts you can redeem stETH to ETH tokens. It will be possible when transfers in Ethereum 2.0 will be available.
Liquid staking protocols allow users to earn staking rewards without locking assets or maintaining staking infrastructure. Users of these protocols can deposit staking tokens and receive tradable liquid tokens in return. The DAO controlled smart contract then stakes tokens with DAO-picked staking providers. Users' deposited funds are controlled by the DAO, staking providers never have direct access to the users' assets.
Ethereum is soon to be the biggest staking economy in the space. However, staking on ETH 2.0 requires expert knowledge and complex and costly infrastructure. There are several reasons why - the main being the fact that slashing and offline penalties can get very severe if the staking is managed improperly. In addition to this, self-staking brings with it a minimum deposit of 32 ETH and a token lock-up which could last years.
Through the use of a liquid self-staking service such as CoinPayMerchant, users can eliminate these inconveniences and benefit from secure, non-custodial staking backed by industry leaders.
It is not possible to unstake your ETH with CoinPayMerchant until transactions are enabled on Eth2. To circumvent this, CoinPayMerchant makes use of the stETH token to allow users to stake ether without losing the ability to trade or otherwise use their tokens.
You can find the current APR on the
staking page. CoinPayMerchant's APR is currently lower than Ethereum's APR due to the activation queue for ETH validators as well as CoinPayMerchant's staking rewards fee. CoinPayMerchant's APR will grow as the rate of active stakers on CoinPayMerchant becomes higher, but will not exceed Ethereum's APR. With CoinPayMerchant, you receive staking rewards within 24 hours of your deposit being made, without waiting for validator activation.
Widget
CoinPayMerchant supports the Metamask browser extension and the Wallet Connect protocol to connect your wallet.
To connect Metamask, visit the widget page and press Connect Wallet. When shown wallet options, choose Metamask and, if prompted, input your Metamask password and confirm connection.
The whole process for mobile wallets using Wallet Connect protocol is as follows:
- Step 1
Log in with your wallet
- Step 2
Find a 'Scan QR' button somewhere in your wallet app
- Step 3
Scan the QR on the screen
- Step 4
Confirm connection in wallets interface
CoinPayMerchant applies a 10% fee on a user’s staking rewards. This fee is split between node operators, the DAO, and an cover fund.
Ethereum 2.0
cStakers will not be able to withdraw staked ETH until Ethereum 2.0, Phase 2 is launched.
ETH 2.0 launches in multi-phase rollout. Staking was launched quite early, but the state transitions — including transfers — will not be launched until later phases of the ETH 2.0 transition. Without transactions enabled, it will be impossible to move, trade or spend ETH that has been staked.
Practically, this means that any ETH staked on ETH 2.0 early in the rollout will be locked and unmoveable for a period of time — possibly even up to 2 or 3 years.
With CoinPayMerchant you’ll receive a liquid staking token “stETH” that can be freely moved and traded at will. It represents your portion of staked ether. We expect its price relative to unstaked ETH to be volatile, depending on market conditions, until Phase 2 starts.
Your first ETH 2.0 rewards will be illiquid untill Ethereum 2.0, Phase 2 is launched.
When ETH 2.0 launches it will be a multi-phase rollout. Staking was launched quite early, but the state transitions — including transfers — will not be launched until later phases of the ETH 2.0 transition. Without transactions enabled, it will be impossible to move, trade or spend ETH that has been staked.
With CoinPayMerchant, you’ll receive rewards (subject to penalties, if any happen) in the form of increased/decreased stETH balance in your wallets. CoinPayMerchant’s staking rewards will start coming in when the deposits to eth2 go through the deposit queue start validating, which is going to happen in the first days of January 2021.
The percentage return on staked ETH will depend on the total staked ETH in the network. APR decreases with an increase in the total amount of staked ETH. More information about ETH staking rewards you can found in the staking dashboard.